Subject Name- Management Science

Prepared By: Dr. Deepak Kumar Naik

UNIT-III

HUMAN RESOURCE MANAGEMENT (HRM):

Nature and scope of HRM, Functions of HRM, Role of HR Manager in an organization, Job
evaluation, Merit rating, Maslow's hierarchy of human needs, McGregor's theory X and theory
Y, Herzberg's two-factor theory of motivation.

What is Human Resource Management?

Human Resource Management (HRM) is the process of managing people in organizations in a

structured and thorough manner. This covers the fields of staffing (hiring people), retention of
people, pay and perks setting and management, performance management, change management
and taking care of exits from the company.

Importance of Human Factor:

1. Output will be greater than the input

2. Each individual is different from culture, education, environment, background etc

3. We can‟t purchase the loyalty, dedication, devotion towards the organization.

4. Time passes human factor can bring experience to organization to accept the challenges

5. Recent developments like legislation, trade unions enhanced their importance.

Definitions of HRM:

There are two different definitions. The first definition of HRM is that “It is the process of
managing people in organizations in a structured and thorough manner.” This covers the fields of
staffing (hiring people), retention of people, pay and perks setting and management, performance
management, change management and taking care of exits from the company to round off the
activities. This is the traditional definition of HRM which leads some experts to define it as a
modem version of the Personnel Management function that was used earlier.

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The second definition of HRM encompasses “The management of people in organizations from a
macro perspective, i.e. managing people in the form of a collective relationship between
management and employees. This approach focuses on the objectives and outcomes of the HRM
functions. It means that the HR function in contemporary organizations is concerned with the
notions of people enabling, people development and a focus on making the “employment
relationship” fulfilling for both the management and employees.

Nature of HRM:

HRM is a management function that helps managers to recruit, select, train and develop
members for an organization. HRM is concerned with people’s dimension in organizations. The
following aspects constitute the core of HRM:

1. HRM Involves the Application of Management Functions and Principles. The functions and
principles are applied for acquiring, developing, maintaining and providing remuneration to
employees in organization.

2. Decision Relating to Employees must be integrated. Decisions on different aspects of

employees must be consistent with other human resource (HR) decisions.

3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an

organization will result in betterment of services to customers in the form of high quality
products supplied at reasonable costs.

4. HRM Functions are not confined to Business Establishments Only but applicable to non-
business organizations such as education, health care, recreation and like.

Scope of HRM:

The scope of HRM is indeed vast. All major activities in the working life of a worker - from the
time of his or her entry into an organization until he or she leaves the organization comes under
the preview of HRM.

The major HRM activities include HR planning, job analysis, job design, employee hiring,
employee and executive remuneration, employee motivation, employee maintenance, industrial
relations and prospects of HRM.

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The scope of Human Resources Management extends to:

 All the decisions, strategies, factors, principles, operations, practices, functions, activities
and methods related to the management of people as employees in any type of
organization.
 All the dimensions related to people in their employment relationships and all the
dynamics that flow from it.

American Society for Training and Development (ASTD) conducted fairly an exhaustive study
in this field and identified nine broad areas of activities of HRM.

Function of HRM:

 Recruitment and maintenance of labour force:- This function includes attracting,

screening, testing, hiring and inducting men on the job.
 Training: - Training is a must to prepare the worker to meet the challenges of the new
jobs or techniques and to maintain and to improve the quality of work so that the
employees may earn more for them and contribute more to the unit.
 Job analysis and Job description: It involves the studies of job requirements of the
enterprise and assignment of well-defined functions to jobs so that qualified employees
may be hired. It forms the basis of wage determination
 Compensation: It includes, determining wage rates, incentive systems, rating of
employees and performance standards.
 Keeping personnel records: It includes collection of bio-data of all employees
pertaining to their work, i.e., training, job performance, aptitude, payment records etc...
 Welfare: - It includes health and safety program, sanitary facilities, recreational facilities,
educational activities etc...

The scope of personnel management is wide enough to cover all the organizations, where
work is done by men.

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 Objectives of HRM:

Objectives of an organization are guidelines of its policies procedures and functions and the
principles are the tools to accomplish these objectives. The main objective of personnel
management is to utilize the available human resources. Objectives are divided in to two
categories –

 General Objectives
 Specific Objectives

General Objectives: -

The statement of general objectives expresses the basic philosophy of top management towards
the labour force engaged on the work.

I. Maximum individual development

II. Desirable working relationship between employer and employees.
III. Effective moulding of human resources as contrasted with physical resources.

Specific Objectives: -

It refers to the various activities of the personnel department.

I. Selection of right type and right number of persons

II. Proper orientation and introduction of new employees.
III. Organization of suitable training programmes for better performance.
IV. Provision for better working conditions and other facilities.
V. Provision of sound, fair and effective wages and salary administration.
VI. Exit interviews
VII. Good relations with trade unions
VIII. Management of grievances

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Job evaluation:-

Definition:-Is the technique of assessing systematically the relative worth of each

job.

Methods of Job evaluation:-2 types

I. Non-quantitative methods
 Ranking method
 Job classification or Grading method
II. Quantitative methods
 points rating method
 Factors comparison method

Merit rating:-

Is the process of evaluating the relative merit of the person on a given job.

Objectives:-

 To determine salary increments

 Decide who has to be transferred, promoted, or demoted.
 To enhance employee morale.
 To guide and monitor the performance of those who are lagging behind.

Methods of Merit Rating:

I. Ranking method
II. Paired comparison method
III. Rating scale
IV. Forced distribution method
V. Narrative or essay method
VI. Management by objectives (MBO)

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Maslow's hierarchy of human needs:

Maslow’s level of hierarchy about human relations and behavioral science approach, his
assumptions are based mainly on theory of ‘Human Needs’, he has defined five level of
hierarchy of needs starting from the biological need and then coming to more intangible ones .

I. Physical needs like food, clothes and shelter

II. Safety needs freedom from fear of insecurity
III. Social needs include a sense of being accepted in the society or environment one finds
him in
IV. Ego needs include feeling of important and recognition
V. Self-actualization needs include need or desire for personal fulfillment of individual
potential and activity

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McGregor's theory X and theory Y:

He divides leadership is two styles labeled theory “X” and theory “Y”. The traditional styles
of leadership and controls stated in theory ‘X’ by McGregor, is exercised to managers on the
basis of his assumptions about human beings. These assumptions as laid down or observed
by McGregor for theory ‘X’ are:

Theory “X”:

I. An average human being does not like to work and he tries to avoid it as far as
possible.
II. He avoids accepting responsible and challenging tasks, has no ambition but wants
security above all.
III. Because of this, the employees are to be forced, concerned and threatened with
punishments to make them put their best efforts.

These people would not work sincerely and honestly under democratic conditions.

However the above assumptions re not based on research finding. The autocratic style
basically presumes that workers are generally lazy, avoid work and shrink responsibilities. It
is believed that workers are more interested in money and security based on these
assumptions the leadership styles developed, insists on tighter control and supervision.

Theory “Y”:

It focuses a totally different set of assumptions about the employees:

I. Some employees consider work as natural as play or rest.

II. These employees are capable of directing and controlling performance on their own
III. They are much committed to the objectives of the organization
IV. Higher rewards make these employees more committed to organization.
V. Given an opportunity they not only accept responsibility but alsolook for
opportunities to outperform others.
VI. Most of them highly imaginative, creative and display ingenuity in handling
organizational issues.

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Herzberg's two-factor theory of motivation:

Maslow’s theory has been modified by Herzberg and he called in two-factors theory of
motivation. According to him the first group of needs are such things are such things as
company policy and administration, supervision, working conditions, interpersonal relations,
salary, status, job security and personal life.

“Herzberg called these factors as ‘dissatisfiers’ and not motivators, by this he means their
presence or existence does not motivate in the sense of yielding satisfaction, but their
absence would result in dissatisfaction. These are also referred to as ‘hygiene’ factors.

In the second group are the ‘satisfiers’ in the sense that they are motivators, which are related
to ‘Job content’. He included the factors of achievement, recognition, challenge work,
advancement and growth in the job. He says that their presence will yield feelings of
satisfactory or no satisfaction, but not dissatisfaction.

Maintenance factors or dissatisfier Motivational factor or satisfier

 Job context  Job content
 Company policy and Administration  Achievement
 Quality of supervision  Recognition
 Relations with supervision  Advancement
 Relations with subordinates  Possibility of growth
 Pay  Responsibility